The new UK government under Prime Minister Liz Truss has stated that it will cap consumer energy prices but it will also undertake many efforts to increase energy supply, primarily from fossil fuels and nuclear. Alistair Osborne writes on The Times website that Jonathan Maxwell, founder and chief executive of Sustainable Development Capital, believes the focus needs to be on stopping waste through improved energy efficiency. Do you agree?
If we want to cut energy bills, we must stop waste, warns investor
Britain could save at least £100 billion if it stopped wasting so much energy, an investor in the sector has said.
Jonathan Maxwell, founder and chief executive of Sustainable Development Capital, accused the government of looking at the energy crisis “the wrong way round” and of failing to recognise the savings that could flow from making the nation more energy efficient.
He said the government’s plan to spend an estimated £150 billion subsidising consumers’ bills should be seen as “a huge wake-up call” that Britain has to restructure its energy markets. However, he was aghast that Liz Truss had said “nothing” substantial on energy efficiency, given the “high level of waste, inefficiency and outdated infrastructure” in the system.
“The biggest problem is that we waste most of our energy,” Maxwell said, adding that the government needed to see that as a “big opportunity. It’s probably the biggest source of productivity gains we’ve got.”
Sustainable Development Capital, which was set up in 2007, specialises in energy efficiency, creating green solutions for clients such as Tesco, Santander Bank and the NHS. It also manages the SDCL Energy Efficiency Income Trust, a constituent of the FTSE 250 share index valued at £1.15 billion.
Maxwell said that 82 per cent of the world’s energy comes from oil, gas and coal, with as much as 70 per cent of it “lost” before it even reached the end user: 10 per cent in extraction; 50 per cent in gas turbines, where the heat from generation does not reach the customer; and 10 per cent in transmission and distribution inefficiencies associated with a centralised grid. “Then, at the point of energy use, you lose even more,” he said.
More than half the energy used by buildings can be wasted via such things as inefficient air conditioning or lighting systems, with some of the biggest culprits in the public sector — “hospitals, schools, Ministry of Defence sites”.
He welcomed any initiatives to encourage households to cut energy consumption, but “the bigger problem is outside the household. Public and commercial buildings, heavy industry and transport are responsible for much more energy waste than households.”
He called for new rules, backed up by fines if necessary, to drive home that “we no longer tolerate waste. I think we should set mandatory targets for buildings, industry and the public sector to reduce their energy. The government could start by cleaning up its own act.”
He said “the good news is you can cut energy use quickly: you can rooftop solar or, instead of generating energy in the middle of nowhere and losing it, you could bring the generation to the point of use with a decentralised grid”. However, “the government’s . . . focus is on adding more energy. I’m not saying we don’t need that, but even if you build everything — more gas, nuclear, wind, solar, frack everywhere — most of it will take ten to fifteen years. But we can stop wasting energy now.”
A report this year from Innovate UK said that investing £58 billion in making buildings more energy efficient could produce £108 billion of savings. Maxwell said that, at today’s prices, savings could be measured “probably in the hundreds of billions”.